Editorial: Hamilton County sales tax hike ought to be a last resort

FILE - In this June 6, 2015, file photo, a customer, bottom, pays for goods while shopping at the Atlanta Farmers Market in Atlanta. U.S. President Donald Trump appears to believe that his tax cuts will start an economic renaissance. The tax cuts were sold as a way to spending on cars, appliances, home projects and splurges out at restaurants. (AP Photo/David Goldman, File)(Photo: David Goldman, AP)

Don’t ask taxpayers to allow you to raid their wallets without exhausting all other possibilities, including selling property, freezing wages and jobs, and examining the county health care plan. And that’s for starters.

All the options put forth so far place the cart before the horse.

Commissioners are expected to pass a resolution Wednesday that will set public hearings for June 4 and June 11 to discuss whether to pursue a sales tax increase to address the county's budget deficit. Various sales tax scenarios will be discussed at the hearings, but the one being recommended by County Administrator Jeff Aluotto is a 0.25 cent sales tax that would generate roughly $38 million a year.

If commissioners decide upping the sales tax is the way to go, the board could vote on or before June 18 to implement the tax. That date is significant because it would provide voters enough time to meet the Aug. 8 deadline to place a referendum on the November ballot if they object to the tax increase. Commissioners could also choose to forgo a direct vote of the board and let voters decide the matter by placing the tax increase on the November ballot themselves.

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County Commissioner Chris Monzel speaks at special session of Cincinnati City Council about the deal struck between the city and the county regarding the Metropolitan Sewer District.(Photo: The Enquirer/Cameron Knight)

Roughly 70 percent of the county's general fund is spent on employee compensation and benefits, which is being eyed by lone Republican Commissioner Chris Monzel. The county's medical expense reimbursement plan and the possibility of selling county buildings and assets could help make ends meet in 2019, Monzel told the editorial board last week.

Finding $28 million under the county's couch cushions won't be easy.

As the county administrator told the editorial board last week, there are no more Queensgate Jails to close or big chunks of budget fat to be cut.

That's why it's a mistake to think of this year's budget like those of the past.

The county's deficit is structural. In other words, without a long-term fix to boost revenues Hamilton County will eventually be unable to pay its bills. There are many reasons for this structural imbalance, including state cuts to the Local Government Fund, Medicaid managed care sales tax, the estate tax and tangible personal property tax. Hamilton County is also burdened by the fact that a majority of the sales tax it already collects goes to Cincinnati's two riverfront stadiums instead of the its general fund.

Commissioner Todd Portune takes questions after introducing a plan to place the sewer district under the control of Hamilton County during a press conference at the Metropolitan Sewer District administration building in the Lower Price Hill neighborhood of Cincinnati on Wednesday, July 26, 2017.(Photo: Sam Greene)

Some tough choices lie ahead for Commissioners Todd Portune, Denise Driehaus and Monzel as they explore how to fill the $28 million budget hole in next year. In recent years, commissioners and county officials have deferred maintenance on buildings, cut staff, shared services and eliminated non-mandated programs, among other responses, to balance the budget.

The county was able to weather the state cuts last year and fill a $14 million budget gap by using some one-time revenue measures that either are no longer an option or unsustainable long-term (such as drawing down the county's reserve funds to dangerously low levels). So it's not a matter of if commissioners should entertain a conversation about raising the sales tax, but rather when.

It's incumbent that commissioners insist the county administration first perform all the necessary due diligence on ways to fill the budget deficit without increasing taxes. State law mandates that county government must perform certain services and functions, but it does not dictate to what extent. Considerable time needs to be spent in these scheduled public hearings exploring how much of reduced government taxpayers are comfortable living with. All the options and data need to be on the table so residents and commissioners can make the best and most informed choice on how to move forward.

Strategic cuts certainly aren't a long-term solution, but they could potentially buy the county a year or two to form a thoughtful plan and approach to a sales tax increase. Monzel has concerns whether the increase recommended by Aluotto is right-sized. Because the taxes couldn't be collected until April (assuming there is no referendum), a 0.25 cent increase would only generate $19 million next year, but $38 million in subsequent years. Monzel says that's $10 million more than what the county currently needs to fill the deficit. What would that extra money be used for?

It's a good question. Taxpayers should rightfully be wary of handing over that kind of blank check with no purpose assigned to it.

However, the county administrator says the money would be used in 2020 to replenish reserve funds that would be used to make up for the full amount of the 0.25-cent tax increase not being collected next year. It would also help cover Inflation and the rising operating costs.

Denise Driehaus, Hamilton County Commissioner and chair of the Hamilton County Heroin Coalition, talk about the state of heroin and prevention strategies in the works that include additional quick response teams, more referrals from hospital emergency rooms to treatment services and a new 16-bed engagement center. (Photo: Liz Dufour)

Meanwhile, Hamilton County faces a cacophony of problems: a heroin epidemic that is placing strains on the courts, jail and child protective services, aging and crumbling infrastructure, outside competition for jobs and economic development and keeping up with new technology – all of which require capital. These needs and the deficit must be addressed, but commissioners should proceed with caution and care.

If commissioners have no recourse other than a tax hike, put it on the November ballot. At least give voters that power. Doing a direct vote and forcing taxpayers to fight it through a referendum will almost certainly leave a bad taste in their mouths and could come back to bite the county in the long run.

But increasing taxes on county residents ought to be the last resort.

This editorial was written by Opinion Editor Kevin S. Aldridge on behalf of the Enquirer editorial board. It includes Vice President/News and Editor Beryl Love, Senior News Editor Mike McCarter, Columnist Byron McCauley and President Eddie Tyner.